Thursday, February 01, 2007

Texas is fixin' to mix oil, water and wind

I met Iberia Louisiana energy developer Herman Schellstede (that's him on the left in the photo) about a year ago at a workshop on offshore wind hosted by the United States Department of Energy in Washington, DC. My colleague and I shared a table with him in the function room of the hotel where the workshop was being held.

Herman is the consummate southern gentleman. Very gracious, reserved and respectful of others. Now combine those qualities with a keen engineering mind shaped by years of experience designing oil platforms in the Gulf of Mexico and a smile and way of speaking that conveys a confidence steeped in wisdom.

He listened intently to the technical presentations and asked questions, but didn't really say much about why he was there. I remember him perking up when a representative from Cape Wind spoke about the trials and tribulations of the first proposed offshore wind project in the United States. Afterwards, in a very modest tone, he told my friend and me about his plans to build a wind farm in the Gulf of Mexico utilizing abandoned oil platforms. As he finished calmly describing his ambitious vision, he said two things that stuck in my mind.

He said that although he had spent many years developing oil projects, he didn't consider himself an "oilman". "If you're in the oil business, you're a dinosaur," he said. "I'm in the energy business. I'm going to build wind projects because that's where the future is."

Then he smiled and (knowing that I hailed from Massachusetts) said, "We're going to beat you Yankees offshore." (GW)

Inherit the Wind

The Gulf Coast is littered with the carcasses of unused oil equipment. Now those structures are being repurposed to build the first offshore wind farm in the United States.By John GeogheganWired MagazineFebruary 2007

The port of Iberia has never been busier. Situated on a narrow canal leading to the Louisiana coastline, the docks here throb with the sound of tugboats towing oil platforms to and from their anchorages in the Gulf of Mexico. When a drilling site is depleted, the platforms return to port; the docks are littered with rusting steel hulks waiting for their next run.

In December, though, one of these platforms, stripped and refurbished by a local startup, returned to sea with a new mission. The first of a flotilla to come, it carried wind-monitoring equipment as well as radar for tracking migratory birds. Those that follow will be topped not by drilling rigs but by windmills. The turbines are bound for an 18-square-mile area roughly 10 miles off the coast of Galveston, Texas, where the first offshore wind farm in the US is under construction. That’s right: The flower of sustainable energy is blooming in oil country. Get ready for the Great Texas Wind Rush.

Formed in 2004, Wind Energy Systems Technology (WEST) is on track to commercialize offshore wind power well ahead of more established and better funded contenders with greener credentials. At $240 million and 150 megawatts of peak output—enough to power 45,000 homes—the project is modest. But the eyes of the alt-energy world are upon it. “WEST may not be in the mainstream, but they’re definitely serious,” says Walt Musial at the National Wind Technology Center in Colorado. “They might actually do it.”

Wind energy is the most promising carbon-free, nonnuclear alternative to fossil-fueled grid power. But regions with enough space and breeze for land-based wind farms—mostly in the Midwest—are far from coastal population centers; the cost of running transmission lines between generators and users is a major disincentive. That’s why wind-power entrepreneurs have set their sights on coastal waters. In the Atlantic, off Cape Cod, the 450-megawatt Cape Wind installation has been in the works for five years. But that project is mired in NIMBY activism and has yet to pass its initial federally mandated environmental review. (Ironically, a cabal of local property owners, including green-energy backers like US senator Edward Kennedy, are leading the fight against Cape Wind for fear it will mar the environment off Martha’s Vineyard.) Another project proposed for New York’s Long Island Sound has run into similar difficulties, and plans for wind farms off California have foundered on the expense of sinking pilings in the deeper Pacific coast waters.

Leave it to a couple of Gulf Coast good ol’ boys to take up the slack.

Harold Schoeffler and Herman Schellstede make an unlikely pair. Schoeffler, who owns a Cadillac dealership, is a Boy Scout troop leader and chair of the local Sierra Club chapter. Schellstede spent four decades designing oil platforms, drilling rigs, and pipelines. His most recent venture was a $45 million project for a Nigerian oil company. In contrast to New England, Schellstede says, in Louisiana “we have 60 years of offshore know-how.”

The two men met in 1984, when they worked together on legislation to upgrade environmental standards for oil rigs. Two decades later, Schellstede was dismantling old oil platforms and barging them back to the Port of Iberia to be sold for pennies on the dollar when he read a Stanford University study that identified the Louisiana-Texas coastline as one of the best spots in the US for wind power. Average wind speed is exceptionally high, and it blows hardest during the hottest hours of the day, when demand for power is at its peak and electricity prices are highest.

Schellstede called Schoeffler, and they drew up a plan to bring offshore wind power to the oil patch. The key was to take advantage of existing oil-industry infrastructure. To save the expense of designing and building specialized offshore wind equipment, they would mount conventional windmills on decommissioned oil platforms. Hurricanes could be a problem, so they decided to outfit their windmills with hydraulic lifts scavenged from oil-industry machinery; the system would lower the turbines in the event of a squall. All told, the economics would enable WEST to compete with land-based wind power—in which Texas leads the nation—as well as with energy from increasingly pricey natural gas and newer coal plants that are still paying off construction costs.

But first they needed to secure government approval. Their first stop was the state of Louisiana, but the bayou bureaucrats rejected the proposal. “They saw us as competing with oil and natural gas,” Schoeffler recalls.

So the pair turned to Jerry Patterson, commissioner of the Texas General Land Office, who had a reputation for supporting wind power. Patterson recognized that shallow-water petroleum reserves were running dry and that drilling in deeper water would be costly. So he set up a fast-track approval process in 2003 for alternative energy projects. Patterson offered to lease WEST the Galveston site for $10,000 a year, an order of magnitude less than the cost of comparable East Coast sites. In October 2005, WEST signed a contract to deliver 150 megawatts, which should take roughly 50 windmills. A test turbine is scheduled to be in operation this summer; the rest should be spinning by late 2008. Another 50 or so could follow by 2010 if demand warrants.

Meanwhile, Patterson’s incentives are attracting other wind-power hopefuls to Texas. For example, Superior Renewable Energy, a company owned by an Australian investment firm, is angling to build a wind farm off Padre Island, near Corpus Christi, Texas. At 500 megawatts, that project is bigger than WEST’s, but it won’t be completed for several years.

WEST is taking full advantage of its head start, negotiating to sell energy to Galveston and to set up another wind farm for Utila, an island off the coast of Honduras. WEST’s approach to offshore wind energy could finally allow clean power to compete economically with fossil fuels. If it shores up the Gulf Coast’s obsolescent industrial infrastructure, with its unsightly barges and looming towers, all the better. Think of it as recycling on a grand scale.